Can HS2 be saved from itself – before it is too late?

As one of the first politicians to champion High Speed 2, I have watched with dismay the warning lights flash one after the other

An artist’s impression of Birmingham’s Curzon Street station

It has the support of the three main political parties. It has made good progress through parliament, passing its Commons stage with a huge majority. It is a long way through the preparatory work with the beginning of construction only about a year away.

Yet the storm clouds are gathering ominously over HS2. As Bob Dylan once remarked, you don’t need a weather vane to know which way the wind blows.

As one of the first politicians to champion HS2, almost 20 years ago now, I have watched with dismay the warning lights flash one after the other.

Let’s start with the financial cost, crucial to the viability of the project. Back in 2010, when Andrew Adonis published his White Paper at the very tail end of the Labour government, the estimated cost was £30bn. By 2013, that had been upped to £43bn. When new trains were added in, the estimate grew to £50.1bn. In November 2015, that was increased to £55.7bn, allegedly to allow for inflation. A leaked Cabinet Office report in 2016 suggested the real cost at that point was nearer £80bn.

The Department for Transport maintains that the project is within budget at the November 2015 figure, as recently as August insisting that “we are keeping a tough grip on costs and HS2 is on time and on budget.”

The reality is that costs look like they are fast running out of control. Does HS2 really need 1,346 staff? What are they all doing?

If only that were true. The reality is that costs look like they are fast running out of control. Does HS2 really need 1,346 staff? What are they all doing? Furthermore, how can it possibly be right that a quarter of them are earning over £100,000 a year, with 15 earning more than £250,000.

You would have thought with such huge numbers of employees and such huge salaries that at least they would have managed to put together a team with all the requisite skills, but it seems not.

Instead, HS2 has generated a steady stream, or perhaps more accurately a torrent of juicy contracts for consultants. In 2017, they spent a jaw-dropping £600m in this way.

31 separate consultancy contracts were let by HS2 in 2017/18, according to Private Eye. These cover almost everything, from economic research to staff training. Not one, but three firms – KPMG, PwC and Deloitte – have been engaged to provide “strategy consultancy”, whatever that is. Aren’t there any of these in-house people earning over £100,000 capable of determining strategy?

Then there is Doug Thornton, HS2’s former head of property who was employed on around £200,000 a year. In June, The Sunday Times reported that he had been sacked after refusing to mislead the HS2 board about the true financial picture.

He was apparently put under “tremendous pressure to accede to an enormous deceit” that the organisation’s budget for buying land was accurate. Incredibly, he suggested that “rudimentary map-based analysis by interns” was the basis of the official estimates, which were out by tens of millions on individual parcels of land, and by billions overall.

In one instance, a site deemed to be agricultural land was valued at £3,800. It turned out to be on a golf course with a Victorian clubhouse and is now likely to cost taxpayers £15m.

Then there are the delays which result from poor project management. The sub-section of HS2 dealing with the approach to Birmingham is a particular worry. Meanwhile, people in key posts leave with alarming regularity.

Two conclusions can be drawn from this sad state of affairs. The first is that the very expensive second-tier management of HS2 are failing miserably to manage the project. Indeed, they are giving an impression of a job lot of Corporal Joneses, darting about and shouting “don’t panic”.

Faced with difficulties, they appear to go round and round in circles, wasting time and money. They also seem incapable of responding sensibly to bad publicity. They promise politicians what they want to hear, such as promising “iconic design”, with no plan or budget to achieve this.

In terms of the second conclusion, insofar as there is a strategy to deal with the mounting mess, it appears to be to pretend all is on course and on budget, in the hope that the project will get far enough advanced to rule out cancellation when the true facts come out.

Whether they can get away with this remains to be seen. The National Audit Office, in their report on HS2 finances, identified the use of “fragile numbers, out-of-date data, and assumptions that do not reflect real life.”

To add to the mix, Sir John Armitt, the National Infrastructure Commission chairman, suggested in August that a further £43bn was needed to upgrade transport links to HS2 to maximise its value.

I cannot say whether this figure is correct or not, but having spent some time when I was a transport minister working on the concept of the door-to-door journey, I am in no doubt his general point is right. It is particularly so for those stations planned to be some distance from city centres, like the East Midlands Hub.

Yet the tragedy has been that, in the face of increasing cost pressures, the government has adopted the opposite policy, instead cutting connections. The rot began to set in during the coalition government years and has got worse since.

The original plan, which I enthusiastically supported, was to link HS2 and HS1, and to use rolling stock that could run at high speed but then transfer seamlessly onto conventional track. In this way, trains from say Newcastle could run on existing track to Leeds, use HS2 to St Pancras, then use HS1 to mainland Europe. That flexibility would not only be empowering for more regions of the country, but maximise the potential customer base.

Then there was the spur to Heathrow, designed to switch short-haul air passengers with a connecting international flight at Heathrow onto train. That would also incidentally have freed up more landing slots at the congested airport.

There was even thought given to extending the Heathrow spur round to Gatwick, which would have given passengers south of the capital a way of accessing the north without having to use London termini, and could have provided a clever way of linking the two airports and maximising their inter-operability, so perhaps obviating the need for a third runway.

Philip Hammond, then transport secretary, was interested in this idea, dubbed “Heathwick” as was Oliver Letwin and myself. Philip even had Andrew McNaughton, now of course technical director at HS2 but then working for Network Rail, sketch out a route. This would have largely hugged the M25 and gone under Staines (or preferably through it, as one minister joked). The journey time between the two airports would have been just 14 minutes.

In the end, all these connections were junked. The above ground link across to HS1 at St Pancras was strongly, and actually understandably, opposed by people in Camden, who rightly regarded it as very destructive. Yet there was a tunnel option. It was difficult, probably only allowing one-way working, and on a gradient, but it could have been pursued.

The Heathrow link was an early casualty of the need to cut costs. As for Heathwick, the aviation industry, wedded to tarmac as it is, was horrified and did its best to kill the idea stone dead.

And now, the government appears likely to move in the opposite direction to that recommended by Sir John Armitt, and make further curtailments.

One option being advanced is to cut out Euston and have trains from the north terminate at Old Oak Common. This idea is actually not without merit. It would save a good deal of money, while still allowing interchange with Crossrail.

Andrew Adonis, that enthusiastic proponent of HS2, has said that “Euston is the poison at the heart of HS2” and called for the terminus to be Old Oak Common

It is also the case that Euston is far from ideal as a terminus. It is short of platforms and short of space, and its tube connections are only with the Northern and Victoria lines. Andrew Adonis, that enthusiastic proponent of HS2, has said that “Euston is the poison at the heart of HS2” and called for the terminus to be Old Oak Common. The London mayor, Sadiq Khan, has endorsed this conclusion.

There is also talk of chopping the route into Manchester and ending the high speed section at Crewe, with trains using conventional tracks thereafter. Also at risk are the nine-mile section linking the high-speed route with the West Coast Main Line in Staffordshire, a further link to the West Coast Main Line near Wigan, and even some stations such as Manchester Airport.

These are drastic cuts and would I suppose reduce capital costs, but reductions in connectivity, both those already made and those being considered, in my view impact both on the wider benefits and, in dry terms, the cost-benefit analysis.

If we end up with a truncated line that gets close to something that stands alone, its attractiveness and usefulness will be much depleted. It may then resemble the white elephant many of its detractors are only too keen to depict it as.

There have of course been opponents of the line ever since it was first mooted. A good number of these were rich Conservative voters who lived, in many case, miles from the line. They cited damage to the environment, loss of habitats, and all sorts of other reasons, but never self-interest. I recall Philip Hammond scathingly, but accurately, observing, that if the line were somehow moved 50 miles to the east, all these so-called concerns about the environment would instantly vanish into the ether.

Nevertheless their NIMBY pressure has meant that more of the line will be tunnelled than is frankly justifiable, pushing up the costs still further.

A large part of the problem has been the name. It implies, wrongly, that the objective of this colossal spend is to knock a few minutes off the journey to Birmingham, when actually it is predominantly about capacity. In retrospect, calling it the Great North Railway, or something similar, might have been a wise move.

These matters – the NIMBY reaction, the name problem, and indeed the genuine issues raised by environmentalists, could all have been contained and to a large extent have been. Whether the self-inflicted problems can be is a bigger question.

The answer is for the transport secretary to get a grip before it is too late. But then the transport secretary is Chris Grayling.

About the author:

Norman Baker served as transport minister from May 2010 until October 2013. He was Lib Dem MP for Lewes between 1997 and 2015.